WASHINGTON, D.C. — In anticipation of the Department of Labor’s (DOL) re-proposal of the definition of fiduciary regulation, the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) and Labor, Immigration and Employee Benefits division today hosted an event and released a white paper on the potential negative, unintended consequences of broadening the current definition of fiduciary.
“While we should always be looking at ways to improve the system for investor protection, the DOL cannot lose sight of the real goal here, and that is to ensure that investors have both the appropriate safeguards and the freedom of choice in how they save for retirement,” said David Hirschmann, president and CEO of CCMC. “No approach by DOL will successfully achieve both these goals unless it is considered in the context of the broader regulatory and enforcement regimes impacting the services financial professionals provide for retirement.”
The white paper, “Using PTEs to Define an ERISA Fiduciary: Threading the Needle with a Piece of Rope,” outlines problems with using prohibited transaction exemptions (“PTEs”) to redefine the fiduciary standard under ERISA. Problems include that the PTE process is lengthy and protracted, causing confusion for investors; exemptions granted by the DOL are burdened by conditions, limitations and requirements; and the exemptive process is generally ineffective in addressing the needs of the employee benefits community.
“Instead of redefining fiduciary regulation, we should be working to find a balance that protects participants and allows for the free flow of information and services in the market,” said Randy Johnson, senior vice president of Labor, Immigration and Employee benefits. “If the Department of Labor believes that the current definition of fiduciary investment advice is lacking, they should explore a more narrow approach to address their concerns, one that protects and educates plan participants while giving them the investment options they need for a secure retirement.”
The event, Fiduciary Standards: A Look Forward, included regulatory experts, plan sponsors, service providers, and consumer advocates, and looked at how individual investors may be impacted by a change in the definition, and the current obligations of financial professionals under ERISA, SEC, and FINRA rules.
The full white paper is available here.
Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.